If you own and operate a contracting business, you face risks inherent to the type of work that you do. While on the job (and even when the job is already finished) there is a chance that your employees, clients, or uninvolved strangers could suffer injuries or have their properties damaged. No matter the nature of the damage, if you are held liable you will be responsible for paying for it with your money.
Lawsuits and settlement fees can range into the tens of thousands of dollars. This can be seriously detrimental to your business and even risk closing your doors for good. How do you mitigate this risk?
Contractor’s insurance can help settle claims and ensure that your contracting business can continue operations as per usual. This is why ever contractor should have insurance:
Every Contractor Faces Risks
Legal fees can come at a significant cost to contractors of every industry. Without contractor’s insurance, professionals would be faced with these expenses alone – which can severely hurt, stall, or shut down their business operations altogether.
No matter how small or large your contracting business is, litigation is a risk that every business is exposed to regardless of the measures they take to preventing any accidents. Not only that, but having contractor’s insurance can provide peace of mind to you, your employees, and your clients. Not having contractor’s insurance may even deter some clients or hiring bodies from working with you.
Is it mandatory for contractors to have insurance?
For the most part, yes, locally. If you’re based in Ontario, you should consider having a plan from an Ontario-based insurance firm. Depending on the work you do and where you operate, you may need contractor’s insurance. In Ontario, any contractor that has one or more employees is required to have worker’s compensation, which is a type of contractor’s insurance that ensures your staff team has protection if there are any on-the-job injuries.
If you are an independent contractor working under a general contractor, you will likely be required as the subcontractor to protect yourself from any risks and acquire a CGL policy. There is a chance you will have coverage under your general contractor’s liability insurance, but this is not always true and sometimes the coverage is not enough to cover you as the subcontractor. It’s worth discussing with a broker to see if your general contractor’s insurance is sufficient or if you will need to purchase your own separate policy.
Types of Contractor’s Insurance
“Contractor” is just a broad term that encompasses a professional operating in one of many different industries. You could be a roofer, an electrician, a plumber, a builder, and so on. Different lines of work, sizes of businesses, etc., all require different coverage. Luckily, there are several types of insurance that are available to contractors, including the following:
Commercial General Liability
This is the most acquired form of insurance for contractors. It can offer protection against claims that are made by clients or uninvolved third parties for any injuries sustained or property damage during operations. Commercial general liability can cover not only the compensation costs, but also any legal expenses that you are required to pay during litigation.
Automobile Liability
Oftentimes, contractors will have a company fleet of automobiles that are used to transport workers, material, machinery, and equipment to and from construction sites. If these vehicles were to cause unintentional death, bodily injury or property damage at a construction site, the owner of this fleet would be responsible for compensating anyone who filed a claim against them.
Having commercial automobile liability can offer protection for any claims of this nature, including claims of damages, loss, injury, and it can also cover any legal expenses during the time that the claim is being considered in a legal setting.
Worker’s Compensation
Worker’s compensation is often mandatory for many contracting businesses that have one or more employees. If your employee is injured on the job, this coverage can include compensation for any disability income, medical treatment, and rehab costs. It can also offer compensation for work-related deaths to the family of the employee.
Contractor’s Pollution
Depending on the nature of you do, you may already be aware of the rigidity enforced by environmental laws. Due to the risk of pollution where you do operations, contractors are faced with the potential of getting sued if they were to accidentally violate any environmental laws in-place. Contractor’s pollution insurance may protect you and your employees from claims of this nature, which can range into the thousands or tens of thousands in a legal setting.
Builder’s Risk
If you work in the construction industry, you likely use a great deal of materials, equipment, machinery, etc. on the job. These items are exposed to the risk of being lost, stolen or damaged. Having builder’s risk insurance can help protect you as a builder and as a contractor from these potential losses. If you are an equipment owner or subcontractor, this insurance can also be of help if you are doing your own project. For the most part, builder’s risk may already be incorporated in your commercial general liability insurance coverage.
Contractor’s insurance protects your bottom line
There are so many kinds of insurance that a contractor’s business can have or should consider having to protect both themselves, their employees, and their business. The cost of contractor’s insurance next to the huge expenses that a claim can bring is nothing.
Although we try to be as careful as we can be while on the job, accidents happen. Having contractor’s insurance protects your company’s bottom line and safeguards the future of your operations for many years to come.
